Axel Weber Drama Needs Explanation

By Terence Roth

Reuters

Bundesbank boss, Axel Weber

Like Wagner’s death of Siegfried, Axel Weber’s departure is epic — only chaotically scripted and at least twice as long.

The Bundesbank president and previously ECB heir-apparent on Wednesday let it be known through anonymous press leaks that he’s had enough central banking and will do, well, whatever. A day later, his promised statement revealed only that he had no statement and was engaged in talks with Chancellor Angela Merkel and everyone should just keep tuned.

That wasn’t the hoped-for denial-confirmation-clarification hoped for after his pseudo-announcement on Wedneday sent euro financial markets into a swoon. Investors liked the idea of the inflation-fighting German central banker running the ECB after respected Jean-Claude Trichet leaves later this year.

Europe wanted some explanation on Weber’s job and even a new steer on the succession issue. What it got was another botched euro-zone communication strategy and another round of shocked, how-did-it-come-to-this looks in finance ministries. It’s been common enough in the erratic responses to the euro-zone debt crisis.

But the Weber drama casts a shadow over the one institution that can be fairly credited with keeping the euro-zone project out of the ditch. Politics is politics. But investors don’t like theater from central banks, preferring reliabile action and communication.

Grey-suited German central bankers from the pre-euro era, when the Bundesbank and its Deutsche Mark loomed over Europe’s other central banks, took a dim view of theatrics and poltics in general.

We will probably have to wait for Mr. Weber’s memoirs to find out what really happened. The German government is made to look not a little silly after the man they quasi-officially backed for the job suddenly bolts. After all, following a Dutchman and a Frenchman, this was deemed Germany’s term for the ECB top job.

It is a safe enough bet that some of Mr. Weber’s colleagues on the ECB board have objected to his departing from the consensus view ECB shows in public. French President Nicolas Sarkozy might have found it easier to agree to a German candidate who was a little less hawkish and a little less opposed to the common issuance of euro bonds to allow all countries to refinance on equal footing.

Whenever the curtain finally falls, this particular act could have been played more elegantly.

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